GovernmentType: Parliamentary democracy. Constitution: Adopted by popular referendum November 28, 1998.Independence: November 28, 1912 (from the Ottoman Empire). Branches: Executive--President (chief of state), Prime Minister (head of government), Council of Ministers (cabinet). Legislative--Unicameral People's Assembly or Kuvendi Popullor--140 seats (100 members elected by direct popular vote; 40 by proportional vote; all serve 4-year terms). Judicial--Constitutional Court, Court of Cassation, multiple district and appeals courts. Suffrage: Universal at age 18. Main political parties; Albanian Republican Party (PR); Albanian Socialist Party (PS); Democratic Party of Albania (PD); New Democrat Party (New DP); Socialist Movement for Integration (LSI); Liberal Democratic Union Party (PBL); Movement of Legality Party (PLL); Social Democratic Party (PSD); Unity for Human Rights Party (PBDNJ).

GEOGRAPHYAlbania shares a border with Greece to the south/southeast, Macedonia to the east, and Serbia and Montenegro (including Kosovo) to the north and northeast. Eastern Albania lies along the Adriatic and Ionian Sea coastlines. Albania's primary seaport is Durres, which handles 90% of its maritime cargo.

PEOPLE AND HISTORYOver 90% of Albania's people are ethnic Albanian, and Albanian is the official language. Religions include Muslim (Sunni and Bektashi), Albanian Orthodox, and Roman Catholic.

Scholars believe the Albanian people are descended from a non-Slavic, non-Turkic group of tribes known as Illyrians, who arrived in the Balkans around 2000 BC. Modern Albanians still distinguish between Ghegs (northern tribes) and Tosks (southern tribes). After falling under Roman authority in 165 BC, Albania was controlled nearly continuously by a succession of foreign powers until the mid-20th century, with only brief periods of self-rule.

Following the split of the Roman Empire in 395, the Byzantine Empire established its control over present-day Albania. In the 11th century, Byzantine Emperor Alexius I Comnenus made the first recorded reference to a distinct area of land known as Albania and to its people.

The Ottoman Empire ruled Albania from 1385-1912. During this time, much of the population converted to the Islamic faith, and Albanians also emigrated to Italy, Greece, Egypt and Turkey. Although its control was briefly disrupted during the 1443-78 revolt, led by Albania's national hero, Gjergj Kastrioti Skenderbeg, the Ottomans eventually reasserted their dominance.

In the early 20th century, the weakened Ottoman Empire was no longer able to suppress Albanian nationalism. The League of Prizren (1878) promoted the idea of an Albanian nation-state and established the modern Albanian alphabet. Following the conclusion of the First Balkan War, Albanians issued the Vlore Proclamation of November 28, 1912, declaring independence. Albania's borders were established by the Great Powers in 1913. Albania's territorial integrity was confirmed at the Paris Peace Conference in 1919, after U.S. President Woodrow Wilson dismissed a plan by the European powers to divide Albania among its neighbors.

During the Second World War, Albania was occupied first by Italy (1939-43) and then by Germany (1943-44). After the war, Communist Party leader Enver Hoxha, through a combination of ruthlessness and strategic alliances, managed to preserve Albania's territorial integrity during the next 40 years, but exacted a terrible price from the population, which was subjected to purges, shortages, repression of civil and political rights, a total ban on religious observance, and increased isolation. Albania adhered to a strict Stalinist philosophy, eventually withdrawing from the Warsaw Pact in 1968 and alienating its final remaining ally, China in 1978.

Following Hoxha's death in 1985 and the subsequent fall of Communism in 1991, Albanian society struggled to overcome its historical isolation and underdevelopment. During the initial transition period, the Albanian Government sought closer ties with the West in order to improve economic conditions and introduced basic democratic reforms, including a multi-party system.

In 1992, after the sweeping electoral victory of the Democratic Party, Sali Berisha became the first democratically elected President of Albania. Berisha began a more deliberate program of economic and democratic reform but progress on these issues stalled in the mid-1990s, due to political gridlock. At the same time, unscrupulous investment companies defrauded investors all over Albania using pyramid schemes. In early 1997, several of these pyramid schemes collapsed, leaving thousands of people bankrupt, disillusioned, and angry. Armed revolts broke out across the country, leading to the near-total collapse of government authority. During this time, Albania's already inadequate and antiquated infrastructure suffered tremendous damage, as people looted public works for building materials. Weapons depots all over the country were raided. The anarchy of early 1997 alarmed the world and prompted intensive international mediation.

Order was restored by a UN Multinational Protection Force, and an interim national reconciliation government oversaw the general elections of June 1997, which returned the Socialists and their allies to power at the national level. President Berisha resigned, and the Socialists elected Rexhep Meidani President of the Republic. Between 1997 and 2002, a series of short-lived governments succeeded one another. Fatos Nano, Chairman of the Socialist Party, has been Prime Minister since July 2002.

During the transitional period of 1997-2002, Albania's fragile democratic structures were strengthened. Additional political parties formed, media outlets expanded, non-governmental organizations and business associations developed. In 1998, Albanians ratified a new constitution via popular referendum, guaranteeing the rule of law and the protection of fundamental human rights and religious freedom.

On July 24, 2002, Alfred Moisiu was sworn in as President of the Republic. A nonpartisan figure, nominally associated with the Democratic Party, he was elected as a consensus candidate of the ruling and opposition parties. The peaceful transfer of power from Meidani to Moisiu was the result of an agreement between the parties to engage each other within established parliamentary structures. This "truce" ushered in a new period of political stability in Albania, making possible significant progress in democratic and economic reforms, rule of law initiatives, and the development of Albania's relations with its neighbors and the U.S.

Nationwide municipal elections were held in October 2003. Although a significant improvement over past years, there were still widespread administrative errors, including inaccuracies in the voter lists. The "truce" between party leaders began fraying in summer 2003. Progress on economic and political reforms suffered noticeably during the latter half of 2003 because of political infighting. However, in December 2003, Prime Minister Nano reasserted his leadership of the ruling Socialist Party and appointed a new Cabinet.

Parliamentary elections were held on July 3, 2005; official certification of the election results is pending.

GOVERNMENT AND POLITICAL CONDITIONSThe unicameral People's Assembly (Kuvendi Popullor) consists of 140 seats, 100 of which are determined by direct popular vote. The remaining seats are distributed by proportional representation. All members serve 4-year terms. The Speaker of Parliament (currently Servet Pellumbi) has two deputies, along with 13 parliamentary commissions, to legislate Albanian affairs.

The President is the head of state and elected by a three-fifths majority vote of all Assembly members. The President serves a term of 5 years with right to one re-election. Although the position is largely ceremonial, the Constitution does give the President authority to appoint and dismiss some civil servants in the executive and judicial branches. The current President's term expires on July 23, 2007.

The Prime Minister is appointed by the President and approved by a simple majority of all members of the Assembly. The Prime Minister serves as the Chairman of the Council of Ministers (cabinet), which consists of the Prime Minister, Deputy Prime Minister, and other ministers. Members of the Council of Ministers are nominated by the Prime Minister and approved by the President.

Albania's civil law system is similar to that of other European countries. The court structure consists of a Constitutional Court, a Supreme Court, and multiple appeal and district courts. The Constitutional Court is comprised of nine members appointed by the Assembly for one 9-year term. The Constitutional Court interprets the Constitution, determines the constitutionality of laws, and resolves disagreements between local and federal authorities. The Supreme Court is the highest court of appeal and consists of 11 members appointed by the President with the consent of the Assembly for 9-year terms. The President chairs the High Council of Justice, which is responsible for appointing and dismissing other judges. The High Court of Justice is comprised of 15 members--the President of the Republic, the Chairman of the High Court, the Minister of Justice, three members elected by the Assembly, and nine judges of all levels elected by the National Judicial Conference.

The remaining courts are divided into three jurisdictions: criminal, civil, and military. There are no jury trials under the Albanian system of justice. A college of three judges, who are sometimes referred to as a "jury" by the Albanian press, render court verdicts.

ECONOMY Albania is one of the poorest countries in Europe. According to the World Bank's November 2003 Poverty Assessment, average per capita income was U.S.$1,230 in 2002. The official unemployment rate is 16%, and 30% of the population lives below the poverty line. Two-thirds of all workers are employed in the agricultural sector, although the construction and service industries have been expanding recently, the latter boosted significantly by ethnic Albanian tourists from other parts of the Balkans. The GDP is comprised of agriculture (approx. 34%), industry (approx. 13%), service sector (approx. 32%), and remittances from Albanian workers abroad--mostly in Greece and Italy (approx. 21%).

Albania was the last of the central and eastern European countries to embark upon democratic and free market reforms. Further, Albania started from a comparatively disadvantaged position, due to Hoxha's catastrophic economic policies. Transition from a centrally planned economy to a market orientated system has almost been as difficult for Albania as the country's Communist period.

The democratically elected government that assumed office in April 1992 launched an ambitious economic reform program meant to halt economic deterioration and put the country on the path toward a market economy. Key elements included price and exchange system liberalization, fiscal consolidation, monetary restraint, and a firm income policy. These were complemented by a comprehensive package of structural reforms, including privatization, enterprise and financial sector reform, and creation of the legal framework for a market economy and private sector activity.

Results of Albania's efforts were initially encouraging. Led by the agricultural sector, real GDP grew, and Albania's currency, the lek, stabilized. The speed and vigor of private entrepreneurial response to Albania's opening and liberalizing was better than expected. Beginning in 1995, however, progress stalled. The collapse of the infamous pyramid schemes of the 1990s and the instability that followed were a tremendous setback, from which Albania's economy continues to recover.

Within recent years, the Albanian economy has improved, although infrastructure development and major reforms in areas such as tax collection, property laws, and banking are proceeding slowly. Between 1998-2002, Albania experienced an average 6.2% annual growth in GNP. Fiscal and monetary discipline have kept inflation relatively low, averaging roughly 4.2% per year between 2001-2003. Albania's public debt reached 67% of GDP in 2002, and the growing trade deficit was estimated at 22% of GDP in 2002. Economic reform has also been hampered by Albania's very large informal economy, which the IMF estimates equals 50% of GDP.

Albania's trade imbalance is severe. In 2002, Albanian trade was U.S. $1.8 billion in imports, and U.S. $350 million in exports. Albania has concluded Free Trade Agreements (FTAs) with Macedonia, Croatia, UNMIK (Kosovo), and Bulgaria. FTAs with Romania, Bosnia, and Moldova are at various stages of approval. However, combined trade with all these countries constitutes a small percentage of Albania's trade, while trade with EU member states (notably Greece, Italy, and Turkey) accounts for nearly 75%.) U.S. two-way trade with Albania is very low. In 2003, U.S. exports to Albania totaled $9.7 million making it the 183rd overall destination for U.S. exports. U.S. imports, during the same time period, totaled $4.3 million, making Albania the 177th overall source of U.S. imports. Major U.S. investment to date has been limited to large-scale infrastructure contracts with the government. The Albanian Government is currently negotiating a FTA with the EU, as part of its Stabilization and Association Agreement negotiations, which, when it comes into force, could significantly reduce revenue collected.

Albania is assiduously trying to attract foreign investment and promote domestic investment, but significant impediments exist. The Albanian government faces the daunting but essential task of rationalizing and uniformly applying business laws, improving transparency in business procedures, restructuring the banking and tax systems (including tax collection), reducing corruption in the bureaucracy, and resolving property ownership disputes.

Business growth is further retarded by Albania's inadequate energy and transportation infrastructure. The capital, Tirana, generally receives electricity most of the day, but constant power outages plague every other major city, small town and rural village. Although recent steps have been taken to improve the transportation infrastructure, Albania has a limited railway system and few domestic airports. Because of the mountainous terrain, goods traveling overland must spend hours traversing the relatively sparse network of switchback roads, many of them of poor quality, to reach destinations that are relatively close.

MILITARY AFFAIRSSince the fall of Communism in Albania in 1991, the country has played a constructive role in resolving several of the inter-ethnic conflicts in south central Europe, promoting peaceful dispute resolution and discouraging ethnic-Albanian extremists. Albania sheltered many thousands of Kosovar refugees during the 1999 conflict, and now provides logistical assistance for Kosovo Force (KFOR) troops. Albania is part of the international Stabilization Force (SFOR) serving in Bosnia, and Albanian peacekeepers are part of the International Security Assistance Force in Afghanistan and the international stabilization force in Iraq. Albania has been a steadfast supporter of U.S. policy in Iraq, and one of only four nations to contribute troops to the combat phase of Operation Enduring Freedom.

Albania continues to work with the international community to restructure its armed forces and strengthen democratic structures pursuant to its Membership Action Plan. At the June 2004 Istanbul Summit, NATO encouraged Albania to continue making progress towards membership. Since 1999, Albania has spent approximately $108 million annually on military expenditures, roughly 1.35% of its GDP. With bilateral and multi-lateral assistance, the Ministry of Defense is transitioning to a smaller, voluntary, professional military, and reducing the vast amounts of excess weaponry and ammunition that litter the country and pose a significant public hazard and proliferation risk. The government continues efforts to collect from civilians the weapons that were seized during the chaos of 1997. The Albanian government and the international community are also working towards making Albania a mine-safe country by 2006. The heavily mined areas of northeast Albania are a legacy of the 1999 Kosovo crisis.

In May 2003, Albania and the U.S. signed a treaty on the Prevention of Proliferation of Weapons of Mass Destruction and the Promotion of Defense and Military Relations. In May 2003, Albania, Croatia, Macedonia, and the U.S. created the Adriatic Charter, modeled on the Baltic Charter, as a mechanism for promoting regional cooperation to advance each country's NATO candidacy. Also in March 2004, Albania and the U.S. signed a Supplementary Agreement to the Partnership for Peace Status of Forces Agreement, which defines the status of American military troops in Albania and further enables military cooperation.

FOREIGN RELATIONSAlbania is currently pursuing a path of greater Euro-Atlantic integration. Its primary long-term goals are to gain NATO and EU membership and to promote closer bilateral ties with its neighbors and with the U.S. Albania is a member of a number of international organizations, including the Organization for Security and Cooperation in Europe (OSCE), the UN, the Stability Pact, the Adriatic Charter, and the WTO. In February 2003, the EU opened negotiations with Albania on a Stabilization and Association Agreement, with an initial focus on implementing essential rule of law reforms and curbing corruption and organized crime.

Albania maintains generally good relations with its neighbors, and has or is seeking FTAs with all the Balkan countries. It re-established diplomatic relations with the Former Republic of Yugoslavia following the ousting of Slobodan Milosevic in 2000. Although the final status of Kosovo remains a key issue in Albanian-Serbian relations, both nations are committed to achieving a peaceful resolution. Albanian, Macedonian, and Italian law enforcement agencies are cooperating with increasing efficiency to crack down on the trafficking of arms, drugs, contraband, and human beings across their borders. Albania has also arrested and prosecuted several ethnic-Albanian extremists on charges of inciting interethnic hatred in Macedonia and Kosovo. Tensions occasionally arise with Greece over the treatment of the Greek minority in Albania or the Albanian community in Greece, but overall relations are good, and Greece is a strong proponent of Albania's eventual integration into the EU and NATO. Albania recently upgraded the railway between the Montenegrin capital, Podgorica, and Albania's northernmost major city, Shkoder, to improve trade. Italy, Greece, and Turkey are Albania's largest trade partners.

U.S.-ALBANIAN RELATIONSAlbania enjoys friendly and cooperative bilateral relations with the U.S. Pro-U.S. sentiment is widespread among the population. Even while the U.S., which had closed its mission to Albania in 1946, was being vilified by Communist propaganda during the Hoxha regime, ordinary Albanians remembered that Woodrow Wilson had protected Albanian independence in 1919. Albanians credit the NATO bombing of Serbia in 1999 with saving thousands of Kosovar-Albanian lives.

In 2003, Albania and the U.S. signed and ratified a number of agreements, including a treaty on the Prevention of Proliferation of Weapons of Mass Destruction and the Promotion of Defense and Military Relations; the Adriatic Charter; and an Agreement regarding the non-surrender of persons to the International Criminal Court. The U.S. strongly supports Albania's EU and NATO membership goals. Working towards NATO membership, the U.S. and Albania signed a Supplementary Agreement to the Partnership for Peace Status of Forces Agreement, an important step in strengthening bilateral cooperation and enhancing security, peace, and stability in the region. Since FY 1991, the U.S. has provided more than $531 million in assistance--not counting U.S. Department of Agriculture (USDA) food aid--to Albania to facilitate its transition from the most isolated and repressive communist state in Europe to a modern democracy with a market-oriented economy, and to support long-term development. In 2004, the U.S. gave over $28 million to Albania under the Support for East European Democracy (SEED) Act program. On September 30, 2004, Albania was selected to participate in the FY 2004 Threshold Program under the Millennium Challenge Account, which may help Albania implement programs targeted toward two critical stumbling blocks to development--corruption and rule of law.

Despite its daunting problems at home, Albania has wholeheartedly supported the U.S. in the global war on terrorism, by freezing terrorist assets, shutting down suspect Islamic NGOs, expelling Islamic extremists, and providing military and diplomatic support for the U.S.-led actions in Afghanistan and Iraq. On October 20, 2004 President Bush authorized for the first time the use of the Nunn-Lugar Cooperative Threat Reduction program funds outside the former Soviet Union. Under Nunn-Lugar the United States plans to assist the Government of Albania with the destruction of a stockpile of chemical agents left over from the communist regime.